Judge Narrows Madoff Trustee's Suit Against the Mets
Tuesday, September 27, 2011
The legal fallout from the Bernard Madoff ponzi scheme has reached the New York Mets. A judge is allowing a lawsuit to go forward, in limited form, against the owners of the Mets by the trustee recovering money for investors who lost money due to Madoff.
The Mets owners may be forced to pay no more than $386 million to resolve claims Irving Picard, the trustee collecting money for investors who lost billions in Madoff's fraud.
In an order issued Wednesday, prior to a scheduled hearing for lawyers in the case, U.S. District Judge Jed Rakoff noted that figure, which is far below the $1 billion Picard seeks. Rakoff said the $386 million consists of $83.3 million in fictitious profits accumulated by the Mets' owners in the two years before the fraud was revealed and more than $300 million in principal that Picard maintains the Mets received during the two years before the fraud was revealed.
Rakoff ruled Tuesday that Picard can only gain that full amount by proving the Mets' owners were "willfully blind" to the fraud.The lawsuit had claimed that the owners either knew or should have known that Madoff was operating fraudulent investment scheme.
Irving Picard is reviewing the opinion, and had no immediate comment.
The Mets owners released a statement Tuesday saying it was pleased the judge limited Picard's claim. Lawyers for the owners have repeatedly said the defendants had no idea Madoff was not investing their money as he said he was.
Attorney Barry Lax, who represents more than 50 Madoff victims who are also being sued by Picard, said Rakoff's decision will have significant value for other Madoff customers and victims, and changes the game.
"The trustee brought clawbback claims against the Mets and all victims to recover net profits over six years...it looks like judge dismissed those claims. Now it looks like the trustee is only allowed to go after clawbacks for the last two years,” Lax said.
He also said the judge upheld a protection for big investors who paid other people to manage their Madoff money for them.
Janet Babin and the Associated Press contributed to this report.